It will also discuss that the process of regulatory management has become more difficult, which entails greater emphasis on the principle of mutual recognition as the main tool for ensuring freedom of movement of goods and services. However, mutual recognition has its limits and is likely to be less effective the more diverse the countries involved.
The challenge facing the Union with the start of the eastern enlargement, the first wave of which was decided at the end of 2002 and implemented during 2004-2006, cannot be underestimated. A region of about 100 million inhabitants was integrated into the EU. Populations deeply rooted in European history had become part of the continental polis, yet these same populations emerged from almost half a century of Soviet domination and planned economy only just over ten years ago. A complex net of similarities and differences make the eastern enlargement something quite different compared to previous episodes of EU expansion.
The first point relates to the relative level of economic development in the Eastern European countries. The second point is a reflection of the particular historical circumstances of these countries. The second, third and fourth features are very much linked to the necessary conditions for successful re building of the EU and the steps that have been taken to meet those requirements.
The previous two enlar...
The second point is a reflection of the particular historical circumstances of these countries. The second, third and fourth features are very much linked to the necessary conditions for successful re building of the EU and the steps that have been taken to meet those requirements.
Enlargement and the Level of Income in the Applicant Countries
The previous two enlargements were, first, to the South, and then, to the North. The accession of Greece, Portugal and Spain in the 1980s brought relatively low-income partners in the Union, and this changed the economic geography and the budgetary structure of the EU. However, both the population dimension and the average income gap of the countries then involved in the southern enlargement were about half those relating to the newest members.
The Northern Enlargement of the 1990s actually raised the average per capita income of the EU, and the accession of Austria, Finland and Sweden brought a net positive contribution to the Union's budget. This time the picture is completely different. The incoming members of the EU are, and will be for quite a few years, significantly poorer than the existing members. Their average wages are lower than in the incumbents; hence there could be an incentive for workers to move westward, and for capital to go eastward.
Their core inflation rates will be higher due to structural transformation and their net contribution to the EU budget will be persistently negative. Of course, all this will impact on a number of EU policies and institutions, in the fields of migration and border flows, financial and budgetary provisions, monetary policy and the working of the ECB and trade and investment flows.